The following is from a recent article in The Wall Street Journal: Joseph Mercurio has...

The following is from a recent article in The Wall Street Journal:

Joseph Mercurio has two children at Boston University, which now charges $21,970 a year for tuition. But he doesn’t worry about the cost, because his employer picks up the tab.

That perquisite is even better than it first appears, because it is tax free. He estimates he would have to earn $80,000 in pretax income to cover his kids’ tuition. “It’s a benefit of enormous value to me,” he says.

So how does he get such an unusual perk? He is executive vice president at Boston University, one of hundreds of colleges and universities that subsidize the cost of education for employees’ children, and sometimes spouses.

Colleges have long argued they need the benefit to retain and recruit valuable employees who might otherwise be lured to competing institutions or more lucrative jobs in the private sector.

It cost the University of Pennsylvania $7 million last year to send employees’ children to Penn and other schools. For Stanford University, the bill is at least $4.5 million, up from $3.5 million four years ago.

Some schools are now discussing cuts in their benefit programs.

To make up an expected $1 million annual decline in federal subsidies, Case Western recently cut its tuition benefit for employees’ children who attend its graduate schools to 50 percent from 100 percent.

Required:

a. Critically evaluate the statement, “It cost the University of Pennsylvania $7 million last year to send employees’ children to Penn and other schools.”

b. Do you think Case Western made a wise decision in cutting its tuition benefits for employees’ children?